On Moody’s upgrade of Philippine credit rating

Money bag

Moody’s ups the Philippines’ credit rating, Business Mirror published.

Here is the official statement from the Department of Finance:

A January 6, 2011 press release by the Department of Finance

Manila – Moody’s Investors Service today changed the outlook on the Government of the Philippines’ Ba3 foreign and local-currency bond ratings to positive from stable.  A positive outlook means that a rating may be raised.

Commenting on the outlook change, Finance Secretary Purisima said: “We appreciate the decision of Moody’s to change the outlook of positive from stable. This shows that Moody’s also recognizes the developments in the Philippines. There is no question on our ability or willingness to pay. We have always honored our debts. The Philippine economy has been growing positively for the past 47 quarters. The Philippines was growing even at a time when most of the first world went into crisis and that is strong proof that our credit story is strong.

“But what is more important to us is how the market prices the Philippines. At this time, we are able to borrow at rates a lot lower than the other nations that are similarly rated.”

The good news came on the heels of the rating upgrade from Standard and Poor’s to BB from BB- in November last year. “S&P quickly recognized the improvements in the Philippine credit story and that’s why they upgraded us in November. Our thrust towards intensified revenue collection while maintaining fiscal discipline has gained strong response and increased tax payer compliance. We are strongly committed to fiscal sustainability and consolidation in the near-term.

“The government’s pursuit of continued economic growth and fiscal consolidation is bearing fruits and the international credit rating agencies acknowledge this.

“From a high of 824.78bps in October 2008, the CDS spread for Philippine bonds is now at only 123.67bps as of January 5, 2011.This is proof of strong investor confidence and compares well with peer country Vietnam at 298.85bps and even with higher rated (Ba2) countries such as Turkey at 137.17bps and Indonesia at 125.67bps.”

A credit default swap (CDS) is a form of insurance on a bond or a bond-like security. The rule of thumb is that the better the credit ratings, the lower the CDS spread.

In its latest rating decision, Moody’s cited the strengthening trend in “the Philippines’ external payments position, the successful conduct of monetary policy which has anchored inflation position and helped to lower the government’s cost of funding” as key drivers for the outlook change. Furthermore, “improved prospects for economic reforms will likely have positive effects on government finances, investor sentiment, and economic growth.”

In its press release, Moody’s lead analyst for the Philippines Christian de Guzman cited greater political stability following the “unambiguous outcome” of the Presidential elections as adding impetus to resilient economy growth. Moody’s also noted the notable turnaround in “fiscal management by the Aquino Administration in its first semester in office.”  Moving forward, Moody’s said that its assessment will focus on the government’s commitment to fiscal consolidation and on the successful implementation of the PPP program for infrastructure development.


Achieving MDG goals to require over P400 billion for 2012-2015

Achieving MDG goals to require over P400 billion for 2012-2015
Business World Online

THE GOVERNMENT needs to spend around half a trillion pesos from 2012 to 2015 if the Millennium Development Goals (MDGs) are to be met before the end of President Benigno C. Aquino III’s term, the Budget department yesterday said.

Budget Assistant Secretary Luz M. Cantor, speaking at a national MDG congress, said agencies involved in the implementation of the UN-sponsored objectives needed P486.55 billion to hit a 2015 deadline.

The estimate, which does not include allocations under next year’s national budget, was based on submissions by the Health, Social Welfare, Environment, Agrarian Reform, Finance and Public Works departments; People’s Credit and Finance Corp. (PCFC); Philippine Ports Authority (PPA); National Food Authority (NFA); and the Philippine Commission on Women (PCW).

Not yet included is the amount needed by the Education department.

The Social Welfare department accounts for the bulk: P343.02 billion for implementing projects related to MDG 1 or the eradication of extreme poverty and hunger. Other agencies involved in meeting this goal include the Agrarian Reform department which has sought P32.7 billion; PCFC, P7.88 billion; Finance department, P500 million; PPA, P167 million; and the NFA, P65 million.

Under next year’s budget, the Social Welfare department’s budget for its Pantawid Pamilyang Pilipino Program was increased to P29.2 billion from this year’s P10 billion, Ms. Cantor said. Some P21.2 billion will go to conditional cash transfers (CCTs), P2.88 billion for the Supplemental Feeding Program, P881 million for the Food for Work Program for Internally Displaced Persons and P4.2 billion for rice subsidies.

The CCTs also address MDG 2 or the achievement of universal primary education and MDG 5 or the improvement of maternal health.

The PCW, in charge of MDG 3 or the promotion of gender equality and women empowerment, proposed a P222-million budget for 2012-2015.

“Among initiatives to mainstream gender sensitivity, the national government continues to carry out measures to improve the implementation of the Gender and Development Policy which directs all government department, bureaus, offices and agencies to set aside at least 5% of their annual appropriations for projects designed to address gender and development issues,” a Budget department document states.

The Health department, in charge of MDGs 4, 5 and 6 or the reduction of child mortality, improvement of maternal health and the fight against HIV/AIDS and other diseases, respectively, said it required P79.84 billion.

The Environment department, concerned with MDG 7 or the assurance of environmental sustainability, asked for P12.68 billion while Public Works department which is also working on the goal wants P9.49 billion.

“With only five years remaining, we need to do more. Statistics show that the ’business as usual’ mindset will not contribute anything substantial…,” Socioeconomic Planning Secretary Cayetano W. Paderanga said.

Jacqueline Badcock, UN Resident Coordinator, said: “The challenge ahead is thus to sustain progress and accelerate the pace of progress on the goals that are least likely to be achieved.” — J. J. A. Cerda